During the week, President Uhuru Kenyatta launched the Kenya Mortgage Refinancing Company (KMRC), a government-backed lender that is expected to drive President Uhuru Kenyatta’s agenda for affordable housing.
In his Big 4 Agenda, President Uhuru Kenyatta hopes to construct at least 500,000 affordable housing units by the end of his term in office in 2022.
The construction of the units is yet to kick off with Kenyans protesting the government’s intention to deduct 1.5 percent per month from salaried employees with a similar percentage from employers.
With the launch of KMRC, the government hopes to tap into Kenyans who earn 150,000 shillings and below per month by giving them house loans from local lenders at the rate below 10 percent.
The current mortgage market rate is at 13.5 percent. Some analysts feel the government plan to have the rate brought down to below 10 percent is overambitious and might not work.
Under the mass housing drive, Kenyans who will want to own houses in Nairobi will qualify for up to 4 million shillings while those outside Nairobi will secure up to 3 million shillings.
Not Available to Individuals
Funds from the Kenya Mortgage Refinancing Company (KMRC) will not be accessed directly by individual borrowers.
The company is set to lend money to local banks at low cost, in the process, enabling them to issue mortgages at single-digit rates.
“Our proposal is that primary lenders should pass the benefits to the borrower by keeping the interest at single digit,” Johnstone Oltetia, Interim CEO KMRC said during the launch on Thursday.
In Kenya, mortgage penetration is still at infancy stage, at 2.7 percent of the country’s gross domestic product. Other countries such as South Africa have their mortgage penetration at 31 percent.
Currently, Kenya has 26,187 mortgage accounts worth 223.2 billion shillings with the KMRC funding expected to push the accounts to 60,000 by the year 2022.